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One of the most debated aspects of C.C. is that competences can lead to internal "rigidities" (Szulanski 1996, Johnson & Scholes 1999, ), or as Lieberman and Montgomery see it the creation of "incumbent inertia". This is because C.C. are a set of different "skills", "assets" and "routines", which may lead to the creation of a competitive weapon especially the "routines" that associate "tacit" and "explicit" knowledge (Nonaka 1991) which cannot be easily imitated by competitors. On the other hand, the adherence to these "routines" can prevent the learning and the development of new C.C. that the conditions of the external environment demand. The C.C. approach tends to define strategy according to the outcome of underlying competencies that exist inside the organization whereby rational and intentional adjustment as regards the different dynamics of the external environment are often ignored. Peter Drucker, recognised that C.C. should "fit reality" and be in alignment with the mission and the external environment of the organisation. In the case of the VOS enterprises the majority, in the light of fluid environmental changes, were locked into both internal "rigidities" and supported by the "incumbent inertia" of the pre-perestroika era. Strategic leadership failed to recognise the sum of the whole in terms of individual skills sets and failed to act on embedded knowledge. Two enterprises stand out and are examined in depth. One located in South Eastern Moscow (Alexander Ovtin) the other in Revda (Ivan Boormatov), in the Central Urals. The former, by 1997, employed 400 (1991: 400 employees) and the latter employed 1250 (1991: 400 employees) people. The collapse of the industrial base of the Commonwealth of Independent States (CIS) meant that where, prior to 1993, Enterprise 13 in Moscow could have expected 75% of its output to go to state industries by the end of 1994 this figure had fallen to 25%. The Revdan Enterprise suffered similarly with a shortfall of its state orders of 80%. Thus, from 1993 these enterprises were to operate on a free and competitive footing with all its concomitant opportunities and threats. The cosy, comfort of `Say's